World Markets for Vegetable Oils and Animal Fats

Abstract

Vegetable and animal oils & fats are the major feedstock for biodiesel production. The following article analyses the development of world supply and demand and the effects on prices, with special focus given for four major oils, i.e. palm oil, soy oil, rapeseed oil and sunflower oil. During the past 20 years world consumption of 17 oils & fats more than doubled from 92.9 million t in calendar year 1995 to 204.3 million t in the year 2015. By far most of the growth was for edible purposes, primarily in Asia and Africa, caused by further rapid population growth and rising consumption per person (on account of changed diets and rising income levels). The annual increase in total consumption of all animal oils & fats has accelerated since 2004 with a boost in biodiesel production by almost 29 million t. Government targets for a further expansion in biodiesel consumption in Indonesia, the USA, Brazil and other countries in the years ahead may result in more or less sizably increasing prices of vegetable and animal oils & fats owing to the limitations of resources (arable land and water), unless a major breakthrough is accomplished in yields per hectare of oilseeds and palm oil. There is the risk that consumers worldwide in their effort to cover food demand (particularly in the low-income developing countries) will suffer from appreciating prices of oils & fats if biodiesel consumption mandates are increased too quickly to levels producers worldwide cannot comply with.